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National Bank of Kyrgyzstan lowers discount rate to 4.25 percent

The Board of the National Bank of Kyrgyzstan has lowered the discount rate to 4.25 percent. The Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov told at a press conference today.

According to him, the price dynamics remains low. As of May 17, inflation in annual terms was 0.3 percent. The decline in food prices slowed down and approached zero values. The core inflation rate continues to decline, reaching minimum values ​​since the beginning of 2017.

«Monetary policy focused on supporting measures to stimulate the real sector of the economy has contributed to the further expansion of lending to the economy and lower interest rates. The short-term money market rates are within the interest rate collar set by the National Bank and converge with the discount rate. Activity in the interbank credit market is high. There is a growth of excess liquidity in the banking system, which causes an increase in the operations of the National Bank for its withdrawal. The situation in the domestic foreign exchange market is stable,» Tolkunbek Abdygulov stressed.

As the Chairman of the National Bank of the Kyrgyz Republic explained, the moderate dynamics of aggregate demand, the growth prospects of the economies of trading partners and low inflation risks in 2019 allowed to reduce the size of the discount rate and expect inflation in the medium term to enter the monetary policy target of 5-7 percent.

«In case of occurrence of risks in the internal and external environment, the National Bank may consider the possibility of adjusting the current direction of monetary policy. The National Bank regularly evaluates external and internal factors of influence on inflation and, depending on the economic situation, will take appropriate monetary policy measures,» the head of the National Bank of the Kyrgyz Republic summed up.

The next meeting of the Board of the National Bank on the discount rate issue will be held on June 24, 2019.

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